The recent turbulence within the US auto parts industry has highlighted the need for hedging recovery risk and predetermining the recovery rate of a bond in advance of any default.
Auto parts supplier Collins & Aikman filed for Chapter 11 protection in May and investors have seen the performance of the firm's debt nosedive. Spreads on Collins & Aikman's 10.75% 2011 bond careered from 600 basis points over asset swaps in February to 1,800bp after the filing.
Following default, the auto supplier
The week on Risk.net, July 7-13, 2018Receive this by email